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I.T.O, Ward 1 (1) , Kolkata Versus M/s. Shahi Roadways Pvt. Ltd

2016 (2) TMI 743 - ITAT KOLKATA

TDS u/s 194A - non deduction of tds on payment of hire charge - Held that:- The payment of hire charges does not fall under the term interest as defined in section 2(28A) of the Act and consequently the payments are not liable for deduction of tax at source u/s 194A of the Act. Hence no disallowance u/s 40(a)(ia) of the Act is warranted. - Decided against revenue

TDS on lorry hire charges and trailer hire charges - Held that:- We find that the assessee had filed all the details before .....

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evidences to substantiate its claim of deduction

Addition u/s 40A(3) - Held that:- We find that the violation u/s 40A(3) of the Act is independent of other addition made on estimated basis by the Learned AO for want of supporting bills and vouchers. Moreover, the Learned AO had duly reduced the amount of cash expenses exceeding ₹ 20,000/- while making the estimated disallowance of expenses and hence the action of the Learned AO cannot be faulted with. - Decided against assessee .....

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s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. The first issue to be decided in this appeal is as to whether the provisions of section 40(a)(ia) of the Act could be invoked in respect of hire charges paid to financier of vehicle loans obtained under hire purchase scheme to the extent of ₹ 15,52,111/-. 2.1. The brief facts of this issue is that the assessee is engaged in transportation business and had paid hire charges for vehicle finance to M/s Ashok Leylan .....

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he hire purchase instalment paid by50 the assessee had no element of interest and relied upon CBDT s Circular No. 1425 dated 16.11.1981. The Learned CIT(A) appreciated the contentions of the assessee and deleted the disallowance. Aggrieved, the revenue is in appeal before us on the following ground:- 1. Ld CIT(A)-1,Kolkata has erred in deleting the addition of ₹ 15,52,111/- made u/s 40(a)(ia) on account of non deduction of tax at source u/s 194A on interest payment to financer of vehicle l .....

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We have heard the rival submissions and perused the materials available on record. We find that the impugned issue is squarely covered by the CBDT Circular No. 1425 dated 16.11.1981 in favour of the assessee. The said circular states as below:- In a hire-purchase contract the owner delivers goods to another person upon terms on which the hirer is to hire them at a fixed periodical rental The hirer has also the option of purchasing the goods by paying the total amount of agreed hire at any time .....

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the provisions of section 194A of the Income-tax Act are not attracted in such transactions. (Instruction No. 1425 F. No. 275/9/801T(B) dated 16-11-81 from CBDT. Vol. XXVII No. 3 page 403.) In view of the aforesaid circular, we hold that the payment of hire charges does not fall under the term interest as defined in section 2(28A) of the Act and consequently the payments are not liable for deduction of tax at source u/s 194A of the Act. Hence no disallowance u/s 40(a)(ia) of the Act is warrante .....

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hire charges of ₹ 7,32,032/- and Trailor hire charges of ₹ 1,01,213/- as expenditure in its profit and loss account for which tax was not deducted at source and hence there is violation of section 194C of the Act. The Learned AO proceeded to invoke section 40(a)(ia) of the Act and sought to disallow the said expenditure. On first appeal, the Learned CITA based on the details filed by the assessee found that single payment does not exceed ₹ 20,000/- and total payment to any part .....

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e charges stating that all the payments were either below ₹ 20,000/- or total payment to one party during the financial year was below ₹ 50,000/- in spite of the fact that ledger a/c and evidences produced during the assessment stage shows that total payment of ₹ 3,96,888/- was made in violation of provision of section 194C( total of single payment in excess of ₹ 20,000/- is ₹ 3,13,259/- and aggregate payment to one single party in excess of ₹ 50,000/- is S .....

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nt exceeding ₹ 20,000/- and no payment exceeding ₹ 50,000/- was made to any party during the year. In the facts and circumstances of the case, we deem it fit and appropriate, in the interest of justice and fairplay, to set aside this issue to the file of the Learned AO to decide this issue afresh based on the evidences submitted by the assessee before the Learned AO. The assessee is also at liberty to file fresh documents and evidences to substantiate its claim of deduction. Accordin .....

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edit Ltd vide hire purchase agreement dated 30.3.2007. The Learned AO felt that the vehicles are not put to use by the assessee before 31.3.2007 and further found that the vehicles were registered only on 11.4.2007 and 12.4.2007 respectively and accordingly felt that the assessee is not entitled for depreciation for Asst Year 2007-08. In response to show cause notice, the assessee replied before the Learned AO that the hire purchase agreement was entered into on 30.3.2007 and the vehicles were p .....

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les were effectively put to use by march 2007 itself. The Learned CITA held that the assessee is a transporter with annual receipt with gross operating income of ₹ 22.03 crores and keeping in view of these facts and circumstances, the assessee is entitled for depreciation u/s 32 of the Act. Aggrieved, the revenue is in appeal before us on the following grounds:- 3. Ld CIT(A)-1,Kolkata has erred in allowing the depreciation of ₹ 6,09,570/- on vehicle no NL-01-0-2921 and NL-01-d-3621 i .....

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for remand report under Rule 46A of the IT. Rule 4.2. The Learned DR vehemently supported the order of the Learned AO and argued that the provisional registration certificates were produced before the Learned CITA for the first time and no remand report were called for by the Learned CITA in this regard from the Learned AO and prayed for set aside to the file of the Learned AO. In response to this, the Learned AR fairly conceded that the issue be verified by the Learned AO in detail. 4.3. We hav .....

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the file of the Learned AO to decide this issue afresh based on the evidences submitted by the assessee before the Learned AO. The assessee is also at liberty to file fresh documents and evidences to substantiate its claim of deduction. No finding is given by us with regard to the allowability of depreciation on vehicles based on the usage of the vehicles by the assessee. Accordingly the ground nos. 3 & 4 raised by the revenue are allowed for statistical purposes. 5. The next issue to be dec .....

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ed the transaction to be a bogus transaction. The assessee tried to explain before the Learned AO that it is a genuine transaction and produced the copy of certificate of fitness of such vehicle along with tax receipt and other motor vehicle documents. The assessee also explained that the vehicle was acquired and then repaired later and hence it is shown in the invoice as scrap. The Learned AO however sought to disallow the depreciation claimed on the said vehicle. On first appeal, the Learned C .....

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paired in order to bring it to the workable conditions in spite of the facts that assessee failed to produce the supporting evidences for repairing the said crane, before AO. 6. Ld CIT(A)-1,Kolkata has erred in admitting the additional evidences regarding bills and vouchers of repairing of unserviceable crane calling for remand report under Rule 46A of the I.T. Rule. 5.2. The Learned DR vehemently supported the order of the Learned AO and argued that the fresh details were produced before the Le .....

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and circumstances of the case, we deem it fit and appropriate, in the interest of justice and fair play, to set aside this issue to the file of the Learned AO to decide this issue afresh based on the evidences submitted by the assessee before the Learned AO. The assessee is also at liberty to file fresh documents and evidences to substantiate its claim of deduction. Accordingly the ground nos. 5 & 6 raised by the revenue are allowed for statistical purposes. 6. The last issue to be decided i .....

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